BILL NUMBER: AB 2871	CHAPTERED  07/10/00

	CHAPTER   105
	FILED WITH SECRETARY OF STATE   JULY 10, 2000
	APPROVED BY GOVERNOR   JULY 7, 2000
	PASSED THE ASSEMBLY   JUNE 22, 2000
	PASSED THE SENATE   JUNE 15, 2000
	AMENDED IN SENATE   JUNE 15, 2000
	AMENDED IN ASSEMBLY   MAY 25, 2000

INTRODUCED BY   Assembly Member Correa
   (Coauthors:  Assembly Members Alquist, Bates, Battin, Briggs,
Calderon, Cardoza, Cedillo, Corbett, Cox, Cunneen, Davis, Dickerson,
Ducheny, Dutra, Gallegos, Granlund, Havice, Hertzberg, Honda,
Jackson, Leach, Lempert, Longville, Lowenthal, Machado, Maddox,
Margett, Mazzoni, Nakano, Olberg, Robert Pacheco, Rod Pacheco,
Pescetti, Reyes, Romero, Scott, Shelley, Steinberg, Strom-Martin,
Thomson, Torlakson, Villaraigosa, Washington, Wayne, Wiggins,
Wildman, and Zettel)
   (Coauthors:  Senators Alarcon, Chesbro, Costa, Figueroa,
McPherson, Murray, Rainey, Sher, Solis, and Soto)

                        MARCH 6, 2000

   An act to add and repeal Section 17053.80 of the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2871, Correa.    Income taxes:  credit:  long-term care.
   The Personal Income Tax Law authorizes various credits against the
taxes imposed by that law.
   This bill would, for each taxable year beginning on or after
January 1, 2000, and before January 1, 2005, allow a credit in an
amount equal to $500 multiplied by the number of applicable
individuals with respect to whom the taxpayer is an eligible
caregiver for the taxable year.
   This bill would take effect immediately as a tax levy.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 17053.80 is added to the Revenue and Taxation
Code, to read:
   17053.80.  (a) For each taxable year beginning on or after January
1, 2000, and before January 1, 2005, there shall be allowed as a
credit against the "net tax," as defined in Section 17039, an amount
equal to five hundred dollars ($500) multiplied by the number of
applicable individuals with respect to whom the taxpayer is an
eligible caregiver for the taxable year.
   (b) (1) (A) "Applicable individual" means, with respect to any
taxable year, any individual who has been certified, before the due
date for filing the return of tax for the taxable year (without
extensions), by a physician (as defined in Section 1861(r)(1) of the
Social Security Act) as being an individual with long-term care needs
described in subparagraph (B) for a period--
   (i) which is at least 180 consecutive days, and
   (ii) a portion of which occurs within the taxable year.
   That term shall not include any individual otherwise meeting the
requirements of the preceding sentence unless within the 391/2 month
period ending on that due date (or such other period as the Franchise
Tax Board prescribes) a physician (as so defined) has certified that
that individual meets those requirements.
   (B) An individual is described in this subparagraph if the
individual meets any of the following requirements:
   (i) The individual is at least six years of age and--
   (I) is unable to perform (without substantial assistance from
another individual) at least three activities of daily living, as
defined in Section 7702B(c)(2)(B) of the Internal Revenue Code, due
to a loss of functional capacity, or
   (II) requires substantial supervision to protect that individual
from threats to health and safety due to severe cognitive impairment
and is unable to perform at least one activity of daily living, as
defined in Section 7702B(c)(2)(B) of the Internal Revenue Code, or to
the extent provided by the Franchise Tax Board (in consultation with
the Secretary of Health and Welfare Agency), is unable to engage in
age appropriate activities.
   (ii) The individual is at least two years of age but less than six
years of age and is unable due to a loss of functional capacity to
perform (without substantial assistance from another individual) at
least two of the following activities:  eating, transferring, or
mobility.
   (iii) The individual is under two years of age and requires
specific durable medical equipment by reason of a severe health
condition or requires a skilled practitioner trained to address the
individual's condition to be available if the individual's parents or
guardians are absent.
   (2) (A) A taxpayer shall be treated as an "eligible caregiver" for
any taxable year with respect to the following individuals:
   (i) The taxpayer.
   (ii) The taxpayer's spouse.
   (iii) An individual with respect to whom the taxpayer is allowed a
credit under subdivision (d) of Section 17054 for the taxable year.

   (iv) An individual who would be described in clause (iii) for the
taxable year if Section 151(c)(1)(A) of the Internal Revenue Code,
relating to gross income limitation, were applied by substituting for
the federal exemption amount specified in that section, an amount
equal to the sum of the federal exemption amount specified in that
section, the federal standard deduction under Section 63(c)(2)(C) of
the Internal Revenue Code, and any additional federal standard
deduction under Section 63(c)(3) of the Internal Revenue Code which
would be applicable to the individual if clause (iii) applied.
   (v) An individual who would be described in clause (iii) for the
taxable year if--
   (I) the requirements of clause (iv) are met with respect to the
individual, and
   (II) the requirements of subparagraph (B) are met with respect to
the individual in lieu of the support test of Section 152(a) of the
Internal Revenue Code.
   (B) The requirements of this subparagraph are met if an individual
has as his or her principal place of abode the home of the taxpayer,
and
   (i) in the case of an individual who is an ancestor or descendant
of the taxpayer or the taxpayer's spouse, is a member of the taxpayer'
s household for over half the taxable year, or
   (ii) in the case of any other individual, is a member of the
taxpayer's household for the entire taxable year.
   (C) (i) If more than one individual is an eligible caregiver with
respect to the same applicable individual for taxable years ending
with or within the same calendar year, a taxpayer shall be treated as
the eligible caregiver if each of those individuals (other than the
taxpayer) files a written declaration (in the form and manner as the
Franchise Tax Board may prescribe) that that individual will not
claim that applicable individual for the credit under this section.
   (ii) If each individual required under clause (i) to file a
written declaration under clause (i) does not do so, the individual
with the highest federal modified adjusted gross income (as defined
in Section 32(c)(5) of the Internal Revenue Code for federal
purposes) shall be treated as the eligible caregiver.
   (iii) In the case of married individuals filing separate returns,
the determination under this subparagraph as to whether the husband
or wife is the eligible caregiver shall be made under the rules of
clause (ii) (whether or not one of them has filed a written
declaration under clause (i)).
   (c) (1) No credit shall be allowed under this section to a
taxpayer with respect to any applicable individual unless the
taxpayer includes the name and taxpayer identification number of that
individual, and the identification number of the physician
certifying that individual, on the return of tax for the taxable
year.
   (2) The denial of any credit under subparagraph (1) may be made
pursuant to Section 19051.
   (d) The taxpayer shall retain the physician certification required
by subdivision (b) and shall make that certification available to
the Franchise Tax Board upon request.
   (e) No credit shall be allowed under this section for any eligible
caregiver whose adjusted gross income for the taxable year is equal
to or greater than one hundred thousand dollars ($100,000) in the
case of a married couple filing a joint return, and fifty thousand
dollars ($50,000) in the case of all other individuals.
   (f) This section shall remain in effect only until December 1,
2005, and as of that date is repealed.
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
